Morning and evening star. Candlestick Analysis: Morning Star, Evening Star, Shooting Star, Doji Stars and Inverted Hammer Candlestick Patterns
The international Forex currency market has long been no longer something speculative or inaccessible to people. The number of players in the market is growing steadily, and the number of free players investing their money is steadily increasing.
For successful investing in the Forex market, simple luck or acting at random is not enough; as a rule, these are the main mistakes of beginners who do not devote enough time to studying the theory. After all, Forex, due to the fact that trading in it is carried out by real people, is a system with its own laws and patterns, or, more simply, market behavior can be predicted.
Forex market movements are based on chart processing. Let's consider a chart in the form of , which displays the price movement of a currency pair in the form of rectangles (candles). A filled candle (black) means that the price is falling, an empty candle (white) - that the price is rising, the upper and lower boundaries indicate the price of the currency at the beginning and end of the time period. The lines extending beyond the candlestick up and down are called candles; they reflect the highs and lows of price fluctuations in the selected period of time.
Several candles form patterns that can be used to predict market behavior with great accuracy.
Let's consider two figures that are quite common on charts and almost completely indicate to change the direction of the trend(direction of movement of the graph). This morning and evening star. They are formed from three candles, the morning star indicates the end of the price fall and a reversal of the upward trend. The evening star, in turn, signals the end of growth and a downward turn in the trend.
morning Star
The morning star consists of a long black candle, a short black candle that is below the first and a long white candle that is above the previous one and partially or completely overlaps the first candle. Their shadows in this figure are not particularly important; the main condition is the gap between two adjacent candles (window), that is, they should not overlap each other. Only in this case the figure is considered complete.
Evening Star
The evening star is the opposite of the morning star and looks like its mirror image:
The first and third candles in both patterns should partially or completely overlap each other.
It is important to remember that the first candle of the pattern must continue the price trend before it and coincide with the trend. The morning star should be preceded by a general decrease in price, and the evening star by an increase.
Now let's try to explain the principle and meaning of the morning star figure. The first black candle means that the market at that moment in time is dominated by sellers who are lowering the price by massively selling currency. The second, short candle shows the struggle between sellers and buyers (they are also called bulls and bears) and the moment when there are approximately the same number of them in the market. The third candle shows the “victory” of buyers, or rather, that there are more of them and the volume of purchases exceeds the volume of sales. After this, the trend reversal occurs, which this figure indicates.
Candlestick analysis in the Forex market
Part 7. Evening star
"You need a cane before you fall"
The time of writing this article is two days before the end of the world. The logical question would be:
- Is it worth writing it? Today is December 19, 2012. There are a lot of assumptions regarding what will happen on December 21, 2012:
- collision with Nibiru;
- destructive gravitational interaction between the Earth and the Black Hole;
- inversion of the Earth’s magnetic field and, as a consequence, maximum solar activity;
- etc.
You could list all the proposed scenarios for a long time, and everyone insists that this is exactly what will happen. But as we know from the example of markets, only one of the possible scenarios is always realized. In fact, the legend about the end of the world is nothing more than an excellent marketing ploy that has brought good profits to many companies and people. Some built underground bunkers, others sold tons of candles, stewed meat and other provisions; even travel companies took advantage of this legend, selling tours to the “end of the world.” Personally, I hope that they will at least show us the upcoming parade of planets on TV, and that is, the assumption is that we won’t be able to see it in the night sky without special equipment, and if the weather also betrays its whims, then the equipment will not help. Of course, I would like to see such a natural phenomenon, because they write that in this form the parade of planets occurs once every 26,000 years. So, most likely we will never see him again, if not now.
What you can definitely see on the charts of currency instruments is the evening star, which we will analyze in this article.
The evening star is the exact opposite of the morning star, it appears on top and serves as a bearish signal. The name of this reversal pattern comes from the planet Venus, which is the first to appear in the evening sky, heralding the onset of night. In the market, the appearance of an evening star means a reversal or a stop in the upward trend.
According to classical candlestick analysis, to determine the evening star on charts you need to:
- a pronounced upward trend;
- after the appearance of a long bullish candle, a small candle (spinning top) appears on the market. It doesn't matter whether it's bullish or bearish. Between the long bullish candle and the small one (spinning top), there should be a window (gap) up.
- the third candle of the pattern should be bearish. It should cover a significant part of the body of the long bullish candle (the first candle of the evening star pattern). The window (gap) down between the second candle of the pattern (spinning top) and the third (bearish) is optional. But its presence only enhances the meaning of the signal.
If the second candle of the pattern is a doji, then such an evening star is called an evening doji star. Examples of an evening star (4-hour chart of USD/CAD) and an evening star of a doji (daily chart of USD/CHF) according to classical candlestick analysis are presented in Figures 7.1, 7.2.
Figure 7.1 Evening star according to classic candlestick analysis (4-hour USD/CAD chart)
Figure 7.2 Evening doji star, according to classic candlestick analysis (USD/CHF daily chart)
As always, it is very difficult to find classic candlestick analysis models on Forex market charts. The evening star is no exception, although if you look more closely, this signal is quite often found on Forex market charts, but in a form different from the classic one. And so, what are the possible types of this signal in the Forex market:
- evening star without windows (gaps);
- evening star with a closed (hidden) window;
- evening star with a window (gap) before the third candle of the pattern (bearish).
Evening star without windows (gaps) is probably the most common one found on forex market charts. An example of an evening star and an evening doji star without gaps is presented in Figures 7.3 (USD/CAD daily chart), Figure 7.4 (USD/CAD daily chart).
Figure 7.3 Evening star without windows (gaps). USD/CAD daily chart
Figure 7.4 Evening Doji star without windows (gaps). USD/CAD daily chart
Although it would not be entirely correct to call an evening doji star without windows (gaps), an evening star, because the very appearance of a doji during an uptrend is a strong signal of a possible reversal at the top. But the version with a top (Figure 7.3) may well have that name. If an evening star appears on Forex charts in the forms presented in Figures 7.3, 7.4, the main attention should be paid to the closing price of the third candle of the model. If it managed to absorb more than 50% of the long bullish candle (the first candle of the evening star pattern), then such a signal can be used in trading. Below I will give examples when the third candle of the model did not cover 50% of the body of a long bullish candle, however, the signal was triggered. This is due to where the signal appears. If it appears at strong resistance, plus there are accompanying signals from other indicators, then the 50% overlap rule can be neglected.
Moving on to the second type of evening star with a (closed) hidden window. Examples of such an evening star are presented in Figure 7.5 (daily gold chart), Figure 7.6 (daily USD/CAD chart).
Figure 7.5 Evening star, with a closed (hidden) window (gap). Daily chart GOLD
Figure 7.6 Evening star Doji, with a closed (hidden) window (gap). USD/CAD daily chart
The morning sky brightens quite quickly with dawn, and the stars disappear from it one after another. Only one luminary remains visible longer than the others. This is Venus, the planet - the morning star. It is many times brighter than Sirius for an earthly observer and is second in the night sky in this sense only to the Moon.
Features of movement across the sky
Today, almost everyone knows which planet is called the “morning star” and why. The beautiful Venus appears in the sky shortly before sunrise. After dawn, it remains visible longer than other luminaries due to its brightness. The most eagle-eyed observers can see a white dot in the sky for several hours after sunrise - this is the “morning star” planet.
Venus also appears before sunset. In this case it is called the evening star. As the sun sinks below the horizon, the planet becomes brighter. It can be observed for several hours, then Venus sets. It doesn't appear in the middle of the night.
Second from the Sun
The answer to the question “which planet is called the morning star” could be different if Venus was in a distant part of the solar system. A similar nickname was given to the cosmic body not only because of the characteristics of its movement across the sky, but also because of its brightness. The latter, in turn, is the result of the position of the planet relative to the Earth and the Sun.
Venus is our neighbor. At the same time, it is the second planet from the Sun, almost identical in size to Earth. Venus is the only one of its kind that comes so close to our home (minimum distance 40 million kilometers). These factors allow you to admire it without the help of telescopes or binoculars.
Things from days gone by
In ancient times, the answers to the question of which planet is called the morning star and which is the evening star did not coincide. It was not immediately noticed that the luminaries that precede their appearance at sunrise and sunset are one and the same cosmic body. Ancient astronomers carefully monitored these stars, and poets created legends about them. After some time, careful observation bore fruit. The discovery is attributed to Pythagoras and dates back to 570-500. BC e. The scientist suggested that the planet known as the morning star is also the evening star. Since then, we have known a lot about Venus.
Mysterious planet
The cosmic body named after it, as if justifying its name, excited the minds of astronomers for a long time, but did not allow them to get closer to unraveling its secrets. Almost until the 60s of the last century, Venus was considered a twin of the Earth, and there was talk about the possibility of discovering life on it. This was greatly facilitated by the discovery of its atmosphere. The discovery was made in 1761 by M.V. Lomonosov.
Improvements in technology and research methods have made it possible to study Venus in more detail. It turned out that the dense atmosphere of the planet consists mainly of carbon dioxide. Its surface is always hidden from observation by a layer of clouds, probably consisting of sulfuric acid. The temperature on Venus exceeds all thresholds imaginable for humans: it reaches 450 ºС. This and other features of the planet became the reason for the collapse of all theories that suggested life on a cosmic body close to us.
Gas giant
However, the question “which planet is called the morning star” has another answer, and more than one. Sometimes this name is used to denote Jupiter. The gas giant, although it is a considerable distance from our planet and is located further than Mars from the Sun, is immediately behind Venus in terms of brightness in the sky. They can often be seen close to each other. As recently as early July 2015, Venus and Jupiter were visible as a beautiful double star.
It should be noted that the gas giant is quite often accessible for observation throughout the night. Therefore, it cannot be called as suitable a candidate for the role of the morning star as Venus. However, this does not make it a less interesting and beautiful sky object.
Closest to the Sun
There is another morning star. The planet other than Venus and Jupiter so designated is Mercury. The cosmic body closest to the Sun is named after the Roman messenger of the gods for its speed. Either ahead of or catching up with the daylight, for an earthly observer Mercury is visible alternately in the evening and morning hours. This makes him related to Venus. The small planet is therefore also historically called the morning and evening star.
Elusive
The peculiarities of Mercury's movement and proximity to the Sun make it difficult to observe. Ideal places for this are low latitudes and the equator region. Mercury is best visible during the period of maximum distance from the Sun (this time is called elongation). In mid-latitudes, the likelihood of seeing one decreases greatly. This is only possible during the best elongations. Mercury is inaccessible to observers from high latitudes.
The planet's visibility is cyclical. The period is from 3.5 to 4.5 months. If Mercury, moving in its orbit, overtakes the daylight clockwise for an earthly observer, then at this time it can be seen in the morning hours. When it is behind the Sun, there is a chance to observe the fastest planet in the system in the evening. Each time Mercury is visible for about ten days.
Thus, this planet is called the morning star with good reason. However, this “nickname” of Mercury is not known to everyone for obvious reasons: seeing it in the sky is a rare success due to its close location to the daylight star, as well as its relatively small size.
So, which planet is called the morning star? We can say with all certainty that such a question implies the answer “Venus”, less often “Mercury” and almost never, although this is possible, “Jupiter”. The planet, named after the goddess of love, due to its proximity to the Earth and high reflectivity, and therefore brightness, is more noticeable to an observer inexperienced in astronomy, and therefore will always firmly occupy the place of the most beautiful morning star for the majority.
Candlestick analysisGreetings, readers of the trading blog. In this article we will look at such strong candle models, indicating a change in trend, like stars. Star in candlestick analysis, it is a candle with a small body that forms a price gap with the previous candle with a large body.
General characteristics:
- The main condition for the formation of a star is the gap between its body and the body of the previous candle;
- Intersection of shadows is allowed;
- Appear both at the tops and at the bottoms;
- The color of the star doesn't matter.
On this page we will analyze the following candlestick patterns: morning star, evening star, shooting star, doji stars and inverted hammer.
It is important: all material is presented in the form of a brief summary based on the book by S. Nisson “Japanese Candlesticks”. We will consider all the necessary aspects of trading candlestick patterns in the relevant articles.
- Is a bottom reversal pattern;
- Consists of three candles. The first two are the general model of the star discussed above;
- The third candle is white and covers a significant part of the black body of the first;
- Ideally, the model contains price gaps before and after the body of the middle candle (star). But this is not a necessary condition and is rarely observed.
Model Evening Star (EVENING STAR)
- Is a top reversal pattern;
- The exact opposite of the morning star model.
Amplifying signals for the “morning star” and “evening star” models:
- The presence of gaps between the bodies of the first candle and the star, as well as between the bodies of the star and the third candle;
- The body of the third candle overlaps a significant part of the body of the first candle;
- Low trading volume during the first trading session (first candle) and high volume during the third trading session (third candle).
Doji Star Models
- Formed when the middle candle (star) has no body (opening and closing prices are at the same level);
- The model is applicable to the first two patterns: “morning doji star” and “evening doji star”;
- If the shadows of the doji star and the other two candles of the pattern do not intersect, then this is called an “abandoned baby” (a strong candlestick pattern, but it is quite rare).
Model shooting star (SHOOTING STAR)
- Is a reversal pattern on top ();
- Consists of two candles that fall under the general characteristics discussed above;
- The body of the shooting star is small and is located at the lower part of the price range of the candle; the upper shadow is long, and the lower one is either absent or very short;
Model inverted hammer (INVERTED HAMMER)
- Is a reversal pattern at the bottom ( does not apply to strong candlestick patterns);
- The exact opposite of the “shooting star” (although this model is not considered a star).
The Morning Star is a simple rising pattern on a Japanese candlestick chart.
morning Star(eng. morning star) - a figure on the Japanese candlestick chart, which consists of three candles. The morning star appears relatively often and predicts growth. This pattern consists of a long dark candle, then a short candle through the gap downwards, and then a long light candle through the gap up.
More information about the Morning Star
The direction of price movement in front of this figure is of little importance. But an important attribute of the morning star is that the price rises after it. That's why morning star is a bullish pattern.
The Morning Star is a reflection of the Evening Star (a similar figure that predicts a fall in the price of a financial instrument).
Read also Evening Star (falling figure) A long white candle, then a short one with the window up, then a long dark one with the window down form the “Evening Star” falling figure. Evening star (an...
As mentioned above, the morning star consists of three candles:
- long dark candle
- a short candle of any color that has opened through a downward window (can be a doji)
- a long light candle that opened with the window up
If the middle short candle is a Doji type candle (i.e. its body consists of a horizontal line), then such a figure will be called “ Morning Star Doji».
The shadows of all the candles included in the figure have little meaning. And here candle bodies are essential: The bodies of any 2 adjacent candles in a pattern should not intersect horizontally. Only if the middle candle opened with a gap (i.e., window) downwards, and the third - with a window up, can the pattern be considered completed. Let me draw your attention once again: the shadows of the candles do not matter, and the bodies of the neighbors should be through the window.
Market behavior during the formation of the Morning Star
The nature of the figure is explained very simply, and after this explanation it becomes clear why technical analysis specialists recommend buying after detecting such a figure.
- First Japanese candle(long dark) shows that at the moment the market is dominated by bears who are selling and “trampling” the price down.
- Medium small candle shows that in the next time period there was a struggle between bulls and bears (ie buyers and sellers, respectively). But, because the middle candle turned out to be short (or even a doji), which means that the forces of supply and demand are approximately equal. Logic dictates that only increased demand could change such a downward micro-trend.
- Last light candle indicates that after the “draw” in the last round, market players realized that they had to buy and extended the price upward by the length of the entire third candle.
In other words, one can recognize the concave nature of the price movement, which indicates a significant and sudden change in market sentiment: If at first the market was selling, then the market became interested in the paper and started buying.